HomeAdvisor has reached a settlement with the US Federal Trade Commission (FTC) over allegedly fraudulent tactics used by HomeAdvisor to sell leads by making unsubstantiated claims about the quality of leads sold to home improvement professionals.
The Federal Trade Commission (FTC) is a federal agency charged with protecting and educating consumers and promoting competition.
It protects consumers from unfair commercial practices, including in this case home service providers, allegedly misled by HomeAdvisor.
False and misleading claims made by HomeAdvisor
The Federal Trade Commission (FTC) reached a settlement with HomeAdvisor, a company affiliated with Angi (formerly Angie’s List), accusing the company of misrepresenting the leads it sold.
An announcement noted that the fraudulent practices had been going on since at least 2014.
HomeAdvisor is a home improvement recommendation website that provides information and reviews on home improvement businesses.
Site users rate companies and submit detailed reviews on web pages specifically tailored for each contractor providing services to communities across the United States.
The HomeAdvisor website makes money by selling leads to the companies listed on the website.
FTC Alleges False and Misleading Claims by HomeAdvisor
The FTC’s complaint alleged that HomeAdvisor misled home builders about the leads they were selling to them.
According to the FTC:
“The FTC’s March 2022 administrative complaint against HomeAdvisor alleges that since at least mid-2014, the company has made false, misleading, or unsubstantiated claims about the quality and source of the leads it sells to service providers searching for potential customers are.
The complaint also alleged that HomeAdvisor frequently told service providers that its leads result in orders much higher than it can prove.
Finally, the complaint alleged that HomeAdvisor sales reps misrepresented that the optional one-month mHelpDesk subscription was free.”
The FTC Order to Pay Scammed Home Improvement Service Providers was issued in January 2023 and was recently approved by the FTC in April 2023.
The FTC’s original January 2023 order called HomeAdvisor’s practices deceptive.
The FTC press release states:
“With today’s order, HomeAdvisor must reimburse millions of dollars to home service providers and stop misleading them about the quality of its leads,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “Even as the nature of work and the economy change, the FTC will continue to fight dishonest business practices aimed at consumers, workers and small businesses.”
The approved order requires HomeAdvisor to pay $7.2 million to “cheated” service providers.
HomeAdvisor also no longer has to make false claims about its leads, specifically that the leads came from people who are willing to hire service providers or that they sent a request directly to HomeAdvisor.
Read the FTC’s official press release approving the order:
FTC Approves Final Order Against HomeAdvisor, Inc. for Deceptively Marketing Its Home Improvement Project Leads
Featured image by Shutterstock/Csaba Peterdi